Bethan Evans – Insolvency Specialist
The first thoughts when the term “winding up” is brought up, are cash flow issues and insolvency proceedings. However, there are even cases when a debt-free organisation decides it’s time to wind up. So, how can organisations avoid running into problems when they decide to close the book on a former business venture.
What is winding up?
Winding up a business is a common exit option for those who are approaching retirement age and a solvent liquidation can be a tax-efficient way of extracting assets from a company whilst also closing the business affairs. Although, there are other scenarios which could lead a solvent company deciding to wind up, these include a change in market conditions, changes in competition or changes in strategic direction resulting from a streamline to the structure of a group.
How to wind up a business with expert help
It is possible to wind up a company independently, simply by dissolving it from the Companies House register, however it is important to proceed with caution if this route is chosen. Winding up a company which has liabilities can result in criminal sanctions, especially when it is all too easy to forget an invoice is pending when there are time lags between issuing a purchase order and receiving the invoice. As such, attempting to dissolve a company without expert help may prove a false economy in the long run.
A licensed insolvency practitioner will be able to guide an organisation through every stage of the process and achieve peace of mind in ensuring the technical aspects of company and insolvency law are fully complied with. The last things anyone wants is to have issues raised by the tax man or pensions regulator down the line, so guaranteeing the right support is received ensures the risks of winding up are mitigated and business owners will be able to sleep at night!
When the time is right to wind up the business, the difference between a smooth exit strategy or a lingering headache is careful planning. By securing specialist advice, organisations can avoid the winding up pitfalls and can maximise their tax advantages when getting closure on their former venture.